Page 42: of Maritime Logistics Professional Magazine (Q1 2011)

Maritime Risk

42 Maritime Professional 1Q 2011
an ambitious local content policy tar-
gets job creation and raising the quality
of the domestic workforce in both the

Oil & Gas and maritime industries.

For foreign investors, it is important
to note that policy changes apply only
from the 11th bidding round onwards
and that preceding concession contracts
are being scrupulously respected.

Current international investors in

Brazil’s energy and maritime sectors –
or those contemplating such a move –
would no doubt prefer that there were
no policy changes. At the same time,

Brazil appears to be applying these
changes in a responsible and transpar-
ent manner.

Not quite removed from the regional
turmoil, Brazil has its own share of
problems. Lurking just under the
veneer of the new prosperity are the
familiar issues of significant levels of
poverty, high illiteracy rates among the
poor, corruption and a robust crime
rate.

Unlike its neighbors, however, Brazil
stands out comparatively as an econom-
ically stable country, while developing
a strong democratic culture that main-
tains its independence from foreign
influence. Bolstering the stable political
climate is a projection of oil and gas
reserves that are expected to surpass
150 billion barrels of oil equivalent
(boe) by 2020, mainly thanks to deep-
water pre-salt finds but also influenced
by an increasing number of shallow
water discoveries in this year alone,
along with important onshore gas finds.

GETTING STARTED

Foreign embassies in Brazil usually
have some form of commercial office
specializing in helping firms from their
countries to start-up in Brazil. Notable
examples are Innovation Norway and
the US Commercial Service. Doing
business in Brazil is not without its
roadblocks. Arguably, it will soon
become the model from which other
regional players will have to draw their
playbooks from as they try to draw jilt-
ed investors back to the table.

Foreign companies are required to
operate with a bank accredited by the

Brazilian financial system and all trans-
actions are scrutinized by the Banco

Central.

When opening a firm in Brazil, it is
compulsory to have a Brazilian director
and foreign companies are required to
have local offices. Local accountants
will ensure compliance with all tax and
reporting procedures. Failure to do so
can result in heavy fines. As with most
places, policies for onshore and off-
shore staff apply and expatriate staff
must obtain work visas.

A strong local presence for foreign
outfits is important here. In most case,
the practice of establishing partnerships
with local entities can make the process
run faster than if you do it by yourself.

Depending on the nature of the busi-
ness, local rules may allow for various
incentives to investors, such as lower
taxes. In this way, a reputable local
legal consultancy – such as the Karl

Kincaid representative in Brazil – can
be vital. These legal consultancy groups
necessarily specialize in Energy and

Shipping in order to provide full sup-
port in all facets of these markets. It
may be easier to get this all support
from one law consultant but this is not
always feasible.

For companies that do not wish to
immediately enter the market, the best
solution may be to partner with a

Brazilian company to represent and
legally market products and services in
the country. The local company then
handles all legal and taxation proce-
dures while the foreign entity can
choose between running the business
remotely from elsewhere, or converse-
ly, agreeing to have the local partner
handle day-to-day business matters.

This option may be attractive to those
wishing to dip their toes into the water
as they navigate the local business cli-
mate, without actually incurring heav-
ier infrastructure startup costs.

UP & RUNNING: HOW & WHY

New entries to Brazil’s marketplace
have more than one option. Here, “one
size does not necessarily fit all.” For

HATLAPA, a mature (90+ years)
marine equipment manufacturer head-
quartered in Germany, the partnership
path was the way to go. Already well
known in the global offshore industry
and looking to enter the thriving

Brazilian markets, HATLAPA chose

Tridente, a Brazilian company with
similar products and 35 years of local
business ties. Tridente’s long experi-
ence in the marine and offshore sectors
made it the natural choice.
"Tridente’s well-established relation-
ships in the Brazilian market are a great
asset for HATLAPA as a global busi-
ness and will strengthen our position in
both marine and offshore markets",
explains HATLAPA’s Offshore Sales